STATEMENT: Artmarket.com: France obtains the maintenance of VAT at the reduced rate of 5.5% (1)

Artmarket.

STATEMENT: Artmarket.com: France obtains the maintenance of VAT at the reduced rate of 5.5% (1)

Artmarket.com: France obtains the maintenance of VAT at the reduced rate of 5.5% in the art market, a great victory with very considerable advantages according to Artprice

PARIS, Sept. 26, 2023 /PRNewswire/ -- Professionals in the French art market will be greatly relieved by this news. The French Government has decided to maintain the VAT rate at 5.5% for initial sales and imports of works of art from countries outside the European Union, proof that the two French ministers (Rima Abdul Malak, of Culture, and Bruno Le Maire, from Economy) have been able to assert their arguments in the face of the strong headwinds from Brussels.

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If they had failed, there was a high risk that VAT would increase to 20% before January 1, 2025, which would undoubtedly have broken the dynamics of the French art market, currently the fourth largest national art market in the world according to Artprice.com by Artmarket.

In recent years, France has been accumulating a series of very positive signs for the resurgence of its art market. Among them, the presence of large private foundations such as the Louis Vuitton Foundation and the Pinault Collection, the replacement of the FIAC by Paris (organized by Art Basel), the arrival and/or expansion of large international galleries such as Gagosian, Zwirner, Skarstedt, Max Hetzler, Thaddaeus Ropac, Continua, Marian Goodman and Bonhams' recent acquisition of the French auction house Cornette de Saint Cyr, not to mention the rise of the two major global auction houses, Christie's and Sotheby's, both owned by tycoons French (François Pinault and Patrick Drahi respectively) and the successful transformation of Drouot and Arcurial (Dassault family), the first auction house in France in terms of turnover and which currently ranks 14th among the top 20 auction houses in the world.

Since Brexit, the French art market has been the main beneficiary as it is the main gateway to the European Union.

An increase in the VAT rate to 20% would have a negative impact not only on artists, antique dealers, art dealers and auction houses, but also on the entire art market ecosystem, which includes tens of thousands of people employed in related fields ranging from construction to journalism, from catering to transportation, from logistics to security and from tourism to insurance.

In March 2023, Parisian gallery owner Kamel Mennour told Le Monde newspaper (interview by Harry Bellet) "If the increase makes it difficult for me to sell his works, I will obviously be less willing to hire new artists." Now that VAT has remained at 5.5%, Kamel Mennour can breathe easy...

Artprice.com by Artmarket congratulates the government's decision.

The 20% VAT would have harmed the art market in France as a whole and, consequently, would have damaged the trust and dynamism of Artprice.com by Artmarket on the part of the French clientele. By the way, as a world leader in art market information for more than 25 years, Artprice notes that its French clients, which a few years ago represented less than 5% of its total clientele, now represent more than 10% (see the document reference registered with the AMF, French Financial Markets Authority of Artmarket.com), which shows that the participation of French collectors has doubled.

Therefore, the reduced VAT rate of 5.5% will continue to apply from 2025 to both initial sales and imports of works of art from outside the EU. The rate will be applied to the total price and not just the margin, which will very slightly penalize sales with low margins.

"A 20% VAT rate would prevent, for example, the return to our country of impressionist paintings or even masterpieces of modern art by artists such as Picasso, Matisse and Manet, which are no longer in France, although they were created in France and are adored by French collectors. Art is not a common consumer good: a State enriches itself both with its imports and with the production of its "local" artists. Conversely, the mass departure of its national treasures "It has an impoverishing impact on the State that loses them." This idea was bravely expressed by the journalist Martine Robert, who became the 'whistleblower' of this cause for the French economic newspaper Les Échos in February 2023.

Thierry Ehrmann – founder of Artprice and CEO of Artmarket.com and sculptor (see his biography in Who's Who in France) – made the following observation: "This decision by the government will ensure that the dynamism of the French art market is not disturbed We can only rejoice at this brave decision by our ministers Rima Abdul Malak and Bruno Le Maire Artprice.com by Artmarket has been working for more than 25 years with all the actors in the French art market and knows to what extent the VAT rate "can affect the proper functioning of the art market. As a sculptor, I have passionately followed artistic creation in France for 40 years, and once again it is resonating throughout the world. This step will give great peace of mind to French artists."

Faced with an increasingly globalized art market, France remains a strong and competitive market.

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France's place in the world and European art market

In the first half of 2023, French auction houses sold 54,000 lots of works of art, generating a total turnover of $384.3 million. The econometrics department of Artprice.com has calculated that France therefore represents 5.9% of the total value of sales at art auctions worldwide (which places it in fourth place in the world) and 50 % of the European art market. And he is getting closer to the Top 3 podium.

Several other European Union countries also play an important role in the global art market, although on a smaller scale: Germany (2.8% of global art auction turnover), Italy (1.5%), Switzerland (1.3%), Austria (0.8%), Poland. (0.6%), Belgium (0.6%). Much less centralized than France, the German market is the strongest neighboring country and Sotheby's has recently launched new sales sessions in Cologne. Read Artprice by Artmarket's reports on the art market: https://www.artprice.com/artprice-reports/the-art-market-in-2022

Competition with the United Kingdom

Despite Brexit, the UK still accounts for 17% of global art auction turnover with VAT at 5%. The competition between London and Paris is particularly palpable every year in October.

In a few weeks Frieze London and Paris by Art Basel will be held in short succession. For the first time, the latter will hunt on equal footing with Frieze, thanks to the power of Art Basel. In short, October is an intense period in which the most prestigious galleries decide whether or not to cross the Channel. It is also a key time when auction houses organize major sales and several organizations choose to make important announcements to the world press. The Marcel Duchamp Prize, for example, is awarded every October by ADIAF (of which Artprice.com by Artmarket is a sponsor) to an artist from the French art scene at the Center Pompidou in Paris.

According to the econometrics department of Artprice.com, in 1960 France's share of the world art market was 62%. The old stock market saying that "a price once reached always returns sooner or later" also works in economics...

More than 23 years ago, when Artprice definitively became the world leader in art market information following the spectacular and unexpected acquisition of the American leader Sound View Press NY, there was a widespread belief in financial and economic circles that the headquarters of Artprice would inevitably migrate to its New York offices. The decision to stay in France was really bold. Today France can be sure that the world leader in art market information, Artprice.com by Artmarket, will remain in France.

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